Sugar futures hit five-month-low, on ideas of looser market

06.12.2016

Sugar futures broke their lowest level in over five months, as funds abandon ship and the fundamental picture gets less supportive.

Broker INTL FCStone on Monday cut its projection for the global sugar deficit, the extent to which supply falls short of demand, to 7.5m tonnes for the 2016-17 crop year, down 2.2m tonnes from its previous estimate.

FCStone is the latest industry watcher to downgrade its idea of this season's deficit.

Last month the International Sugar Organisation trimmed its forecast for the 2016-17 deficit by 860,000 tonnes, to 6.19m tonnes.

And Green Pool Commodity Specialists saw the deficit at 5.28m tonnes, down 520,000 tonnes from its previous estimate.

Surplus next season

And consensus is growing around a market surplus in the 2017-18 season.

"The market's attention has moved on from 2017 tightness to 2018 comfortableness," said Marex Spectron.

"Demand has remained sluggish despite falling prices, which 'proves' that the predicted tightness is still not here," Spectron said.

Fund sell-off

Funds have been piling out of New York sugar futures.

Friday's Commitment of Traders report showed managed money funds continuing to reduce their net-long position.

"Friday's positions confirmed what most had already surmised from observing trading day‑to‑day: investors had sold another large chunk of their long position," Tobin Gorey said.

March sugar futures on Monday fell to 18.52 cents a pound, the lowest level for the front month contract in more than five months.

March sugar futures were down 0.9%, at 18.95 cents a pound in mid-day deals New York,


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